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    Morning Report – Thursday 15th August

    THE DAILY REPORT

    MORNING REPORT

    TOP THINGS TO KNOW

    Dow posts biggest one-day drop since October as recession fears take hold

    (Reuters 15/08/2019) - Wall Street sold off sharply on Wednesday as recession fears gripped the market after the U.S. Treasury yield curve temporarily inverted for the first time in 12 years.

    All three major U.S. indexes closed down about 3%, with the blue-chip Dow posting its biggest one-day point drop since October after 2-year Treasury yields surpassed those of 10-year bonds, which is considered a classic recession signal.

    Dire economic data from China and Germany suggested a faltering global economy, stricken by the increasingly belligerent U.S.-China trade war, Brexit woes and geopolitical tensions.

    Germany reported a contraction in second-quarter gross domestic product, and China’s industrial growth in July hit a 17-year low.

    “It was all negative and not much positive today,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

    “We’re outside of the earnings season and markets are being batted around by news.”

    “It’s a reactionary market right now and probably will continue to be,” Carlson added. “My guess is we’re probably in for this until after Labor Day.”

    Wednesday was the first time that yields for 2-year and 10-year Treasuries had inverted since June 2007, months before the onset of the great recession, which crippled markets for years.

    The U.S. yield curve has inverted before every recession in the past 50 years.

    RBA’s Debelle: Keynote address at the 14th Annual Risk Australia Conference

    (FXStreet 15/08/2019) - RBA's deputy Governor, Debelle, is crossing the wires with a Keynote Address At the 14th Annual Risk Australia Conference.

    Key comments:

    Evidence that fall in house prices has reached its end, may start supporting consumption.

    Assumes households will spend around half of tax refunds.

    Do not expect much of an increase in wages growth, employment seen "reasonable".

    Primary risk to domestic economy is outlook for consumption.

    Trade is increasingly being used as a bargaining tool of choice.

    China stimulus has, so far, offset impact of trade dispute on Australia.

    Firms might have to chose between east and west rather than selling into global market.

    Sino-US. trade dispute causing significant uncertainty for business.

    Plausible that effects of technology dispute will be larger than that of tariffs.

    Businesses waiting to see how uncertainty resolves rather than invest.

    Says reluctance to invest runs the risk of a self-fulfilling downturn.

    Global economy runs risk of self-fulfilling downturn.

    Not sure how much signal to take from inversion of US yield curve.

    FX implications:

    There was a brief pop to the downside but the markets are dead, awaiting the Australian Unemployment data as the main driver for the day ahead.


    TRADE OPPORTUNITIES

    Below are Trading Central's Intraday preference recommendations. Short (SELL) positions and long (BUY) positions have two targets issued which may be used as take profit levels. Above or below a certain figure indicates the pivot level which may be used as a level for stop loss.

    CRUDE OIL 30 Minute – Short positions below 56.44 with targets at 53.53 & 52.95.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    WHEAT 30 Minute – The upside prevails as long as 474 is support.

    FTSE Daily – Short positions below 7415.00 with targets at 7000.00 & 6855.00.

    GOLD Daily – Long positions above 1450.00 with targets at 1535.00 & 1565.00.

    ASX 200 Daily – Short positions below 6715.00 with targets at 6445.00 & 6320.00.

    SILVER Daily – Long positions above 16.3500 with targets at 17.7000 & 18.2000.

    HANG SENG Daily – Short positions below 26300 with targets at 24550 & 23780.

    PALLADIUM 30 Minute – Short term rebound towards 1463.50.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    Economic Announcements
    (times in AEST)

    Risk Warning
    Trading FX and CFDs involves a substantial degree of risk and should only be undertaken with risk capital. Please consider our PDS and FSG before trading with us. A copy can be found on our website www.forexct.com.au. Forex Capital Trading Pty Ltd provides general advice that does not take into account your objectives, financial situation or needs. Investors do not own or have rights to underlying assets. Forex Capital Trading Pty Ltd is regulated by ASIC (AFSL 306400), ABN (69119086270). Forex Capital Trading Pty Ltd’s AFS license and Australian regulation only applies to the financial services being provided in Australia only.

    Posted: August 15, 2019 | 5:45 AM